Compression Explained

Compression is a concept within the network marketing industry that is related to how commissions are paid out in the MLM structure.

Compression in network marketing refers to a process that ensures that commissions are not lost when distributors or members in the downline do not meet certain requirements or become inactive. It is designed to protect the income of active distributors and leaders within the network.

Unilevel Structure

In many MLM compensation plans, distributors build a downline organization. This downline typically consists of distributors they’ve personally recruited and those recruited by others in their organization, forming multiple levels or “legs.”

Levels of Qualification

MLM companies often have certain qualifications or requirements that distributors must meet to be eligible for commissions. These requirements can include personal sales volume, group sales volume, or other performance criteria.

Inactive or Non-Qualifying Members

Some distributors in your downline may become inactive or fail to meet the required qualifications for earning commissions. This can be due to various reasons such as lack of effort, reduced sales, or personal circumstances.

Compression Mechanism

To prevent active distributors from losing commissions when someone in their downline is inactive or non-qualifying, compression is applied. When compression is triggered, the commissions that would have been paid to the inactive distributor are “compressed” or pushed up to the next qualified distributor in the upline.

Here’s an example to illustrate compression:

You are a distributor at the top of your MLM organization.
You have several levels of distributors in your downline.
One of the distributors on your third level is inactive and doesn’t meet the qualification requirements for commissions.
Without compression, you might not earn any commissions from this distributor.
Compression ensures that the commissions that would have gone to the inactive distributor are instead paid to the next qualified distributor in your upline, potentially benefiting you.

Compression helps maintain the integrity of the compensation plan by ensuring that commissions flow through the organization, benefiting active distributors and leaders. However, the specifics of how compression is implemented can vary from one MLM company to another, so it’s essential for network marketers to thoroughly understand their company’s compensation plan and policies regarding compression.

We are independent business partners of LIFE WISE. We are not LIFE WISE employees or corporate representatives. All information contained within this site (videos, testimonials, blog entries, etc.) are for informational purposes only. LIFE WISE, Inc. does not guarantee or imply any specific earnings or income. Individual income results may vary significantly and are based on many factors, including a Partner’s individual efforts, business experience and skills. LIFE WISE, Inc. makes no warranty or representation as to the level of success, if any, Distributors may achieve by selling any product or in soliciting Partners or retail customers.

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